New York Insurance Broker Arrested, Charged in $1M Fraud Scheme

June 30, 2020

A New York state insurance broker has been arrested and charged with wire fraud, attempted wire fraud and aggravated identity theft and is facing a maximum penalty of 20 years in prison.

U.S. Attorney James P. Kennedy Jr. announced the charges against Brian Bartz, 38, of Rochester, N.Y.

Assistant U.S. Attorney Meghan K. McGuire, who is handling the case, stated that over the past five years, Bartz has been employed as an insurance broker by several different life insurance companies, including the Benjamin Hollamby Agency, which sold life insurance policies on behalf of Nationwide Life Insurance Company, the Banker’s Conseco Life Insurance Company, Mass Mutual Life Insurance Company and the Lavoro Group via Mass Mutual, located in Rochester. The general practice of these companies was to offer monetary commissions and/or bonuses to their agents when agents sold life insurance policies.

According to the complaint, Bartz would submit false applications for life insurance policies to the insurance companies on behalf of individuals who were not aware of these applications. The applications included individuals’ means of identification without their knowledge or consent.

In order to avoid detection, he used various victims’ bank accounts to pay the premiums for the unauthorized policies. Between 2015 and 2020, Bartz defrauded or attempted to defraud a number of life insurance companies and dozens of investors out of more than $950,000.

The complaint further states that some of his conduct was discovered after his departure from the insurance companies. For instance, after he left the Benjamin Hollamby Agency in February 2018, Nationwide conducted an annual audit revealing that a disproportionately large number of life insurance policies sold by Bartz had lapsed due to policyholders failing to pay the required premiums.

As a result, Nationwide performed an internal investigation and determined that many of the lapsed policyholders had never given the defendant authorization to apply for a policy on their behalf.

In October 2019, investigators executed a search warrant on the contents of the defendant’s personal email, which he used to effectuate his scheme. That review revealed that, on multiple occasions, Bartz received emails from Nationwide that were addressed to and intended for prospective policyholders but were sent directly to his email address.

The emails contained a link to a website application that prospective policyholders were supposed to complete, electronically sign and submit to Nationwide. These emails were sent shortly before Nationwide received completed applications for these individuals. Investigators believe that the defendant completed the applications and submitted them without the victims’ knowledge or consent, according to a press release issued by the U.S. Attorney’s Office.

In total, Bartz fraudulently submitted approximately 150 policy applications on behalf of approximately 120 individuals to Nationwide and, as a result, Nationwide paid out approximately $250,000 in commissions and bonuses that it otherwise would not have paid.

The defendant continued to engage in this scheme of submitting false life insurance policy applications, collecting commissions for the sale of those policies and using victim bank accounts to pay the policy premiums after he left the Benjamin Hollamby Agency and Nationwide.

At Banker’s Conseco, Bartz allegedly fraudulently submitted approximately 29 policy applications on behalf of approximately 22 individuals, attempting to fraudulently obtain approximately $70,000 in commissions and bonuses. Banker’s Conseco discovered the fraudulent scheme in time to avoid making the payments.

At Mass Mutual, the defendant fraudulently submitted approximately 138 policy applications on behalf of approximately 10 individuals, attempting to fraudulently obtain approximately $110,000 in commissions and bonuses. However, Mass Mutual discovered the fraudulent scheme in time to avoid making the payments as well.

In addition to defrauding insurance companies, Bartz attempted to defraud individual victims through a fraud scheme commonly known as a Ponzi scheme. The defendant targeted individuals that he either already had years-long relationships with as their life insurance agent or who were referred to Bartz as a life insurance/investment agent.

While working at the life insurance companies, Bartz began to persuade individuals to make premium payments to him directly instead of to the life insurance company with which they had or believed they had a policy.

In addition, Bartz represented himself as an investment advisor and convinced victims to invest their money in investment funds that he controlled, which did not exist. To avoid being detected, he used a small portion of incoming new investor money to make promised payments to earlier investors. Bartz is accused of defrauding individual investors out of approximately $530,000.

The complaint is the result of an investigation by the Federal Bureau of Investigation, under the direction of Acting Special Agent-in-Charge Robert Guyton. The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.

Source: U.S. Attorney’s Office, Western District of New York

Topics USA Carriers Agencies New York Fraud Abuse Molestation Policyholder

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